Over the past few weeks, I’ve had the privilege to talk with several audiences about the need for impact entrepreneurship. It has been so much fun and it has led to several conversations that have challenged my assumptions and grown my understanding about impact business and entrepreneurship. I've gained a deeper understanding of what it currently looks like and what it has the potential to become.
Over the next few weeks, I want to share some of these insights. I hope they will challenge and grow your understanding, and in turn, I hope to be challenged by your questions and comments.
Where Do We Start?
Most of the people who are attracted to the topic of social entrepreneurship don't need to be convinced that it is the right thing to pursue. Their experience or worldview has led them to the conclusion that it is a necessary endeavor.
Yet, I realize that not everyone is ready to embrace that way of thinking. And I'd be kidding myself to think that everyone will eventually get there.
I know some of you may not be there yet. You are curious, but not convinced. And for those of you who fall into this category, I want to share what I have seen. I hope it will move you a little further down the road, or at least challenge some of your assumptions about impact entrepreneurship.
The Free Market is Broken
I am a fan of the free market. Trade and business has led to an increased quality of life for many people in parts of the world.
And while it has provided prosperity for some, even in the places where the free market is least encumbered by regulation, there are still individuals and people groups unable to participate in or benefit from that increased quality of life.
This is because the free market is a broken system.
As much as I was would love to say the free market will solve all of our ills, it won't. And neither will any other system on its own. We are all imperfect, broken people. Any systems we create will mirror our flaws and brokenness.
But don't give up hope!
We can work to make things better in the midst of brokenness. Even though we are unable to achieve perfection in this life, we can work to make things better.
What Economic Brokenness Looks Like
We can see brokenness throughout the world in many ways.
I've seen it first hand across five continents. In every country I have been to, there are signs and brokenness and poverty. Sometimes it hits you right between the eyes, but in other places you have to look a little harder because we've tried to sweep it under the rug. But it is there.
It is in the Kibera slum of Nairobi, Kenya. In a gypsy village outside of Sofia, Bulgaria. Down the side streets of Tegucigalpa, Honduras.
Here is what worldwide brokenness looks like from a statistical standpoint (courtesy of the World Bank):
- 50% of the global population, or close to 3.8 billion, people live in poverty. This is defined as living on less than $2.50 per day.
- 10% of the global population, or 770 million people, live in extreme poverty. This is defined as living on less than $1.90 per day.
The United States Economy is Broken
It isn't only individuals living in countries with limited freedom that experience brokenness.
Here in the United States, in a land filled with opportunity, entire groups of people suffer tremendously because they have been pushed out of a broken system and lack the resources or training to get a job, build equity, or pull themselves out of poverty.
Sure, it presents a bleak picture of the American dream, but those of us who benefit from this system don't have to dig very far to discover its brokenness. We just have to open our eyes to see how we have prospered at the expense of others. We see how our systems are created and manipulated to benefit some, while systemically ignoring others.
Some statistics for economic brokenness in the United States include (courtesy of Practicing the King's Economy):
- 75% of ex-felons remain unemployed a year after being released because 60% of businesses report that they would “probably not” or “definitely not” hire someone with a criminal record.
- Ex-felons, if employed, experience a 10% to 20% drop in wages
- There are still neighborhoods of concentrated poverty in the US that experience unemployment rates up to 70%.
- 50% of families who receive government subsidized food (food stamps) have one person in the home who is working, yet unable to make enough to be considered above the poverty line.
- 25% of working Americans make less that $10 per hour. A calculator provided by MIT estimates the living wage for a single adult in the US should be $16.14 per hour.
In the US, we also see a inequality of pay and access to equity when you compare men to women and white to black and hispanic individuals.
Whether we live in the richest country in the world, or its poorest, we are broken, and we see it daily is in our broken economies.
"Traditional" Business Impact
Broken people and broken systems are not a new concept. In fact, they are as old as Adam and Eve. Since the fall, we've made prideful and selfish decisions that ultimately harm ourselves and others.
Throughout history, we see examples of systems the cause or keep people in poverty, but we also see examples of creative solutions, and many of those come through business. For instance, the ancient Israelites implemented gleaning into their business practices to address poverty. And monks have used business to subsidize their work with those in poverty.
Throughout history, business has been party to the problem of poverty, but it has also been part of the solution.
Over the past few decades, corporate culture has developed a "traditional" way of impacting the community through corporate giving programs. This typically means companies maximize their profits and then give give some portion of those profits to local charities in exchange for tax breaks.
It also looks like businesses allowing their staff to use some of their time to volunteer for a local charity. This could be anything from one day a year to an afternoon every few weeks.
I don't want to discourage this practice. It can be very transformational for individuals and some of the charities receiving these funds are doing great work.
Yet, there is a more direct way businesses can have a sustainable impact on the communities and economies around them.
Wholistic Business Impact
Do you want to significantly impact your community? Then it is time to do more than simply write a check to charity or donate a couple of hours a month. By changing the way you run your business, you have the potential to more significantly impact your local community.
You can create significant impact by making changes in:
- Who you hire.
- Who you buy from.
- How you train your staff.
- How you share profits.
- How you distribute equity.
- How you use materials and resources.
By strategically choosing to change the way you work, you can have a direct impact and improve the lives of those in your community. And sometimes, you may be able to create positive impact that reaches far beyond your local community.
As I dive deeper into how businesses can use their day to day operations to create a positive impact, I hope you will join me on this journey and allow some of your assumptions to be challenged. Let's dig in together to ask questions and challenge one another to think deeper on these issues and make changes that begin to heal the brokenness in our communities.